Published: 13 December 2016
Economic growth will continue. For both this year and 2017, GDP is projected to grow by 2.1%. Next year, unemployment will decrease to 5.3% and the government budget will be balanced. Purchasing power will increase by 0.7%. The international situation, however, remains uncertain. The consequences of Brexit, for now, appear less severe than expected, but the economic and political situation in the European Union continues to be uncertain. This is the conclusion by CPB Netherlands Bureau for Economic Policy Analysis in its December projections for 2016 and 2017, published today.
Go straight to the data.
Household consumption is the main driving force behind the economic growth in the Netherlands. The disposable income of households will increase thanks to the ongoing rise in employment, in combination with real wage increases. The strong growth in the housing market forms an additional stimulus for consumption.
The decrease in unemployment of 2016 is projected to continue in 2017, when around 475,000 people are expected to be unemployed; which is 65,000 less than in 2016. Employment will increase next year by 120,000 people, following the 2016 increase of 100,000. This projected increase will mostly be due to companies in the market sector; the number of employees in the public sector (health care and government) will remain stable.
For 2017, the projected increase in purchasing power of 0.7% is less strong than that of 2016. Although the rise in contract wages will remain the same in both years, inflation is projected to increase in 2017. Next year’s developments in the taxes and social security contributions will be less positive for purchasing power. The higher nominal health care insurance premium will have a negative impact on purchasing power, but this will be compensated by higher health care benefits for lower income households.
In 2017, after many years of deficit, the budget will be balanced. Revisions to the previous September projections are mainly due to better than expected tax revenues from VAT, labour tax and corporate income tax, as well as to more favourable economic prospects for the coming year. The debt ratio will decline, for the first time since 2010, to below the Maastricht norm of 60% of GDP.